Being the 800 pound gorilla of online payments isn’t easy. Despite PayPal’s ubiquity and the fact that it remains at the forefront of digital payments, including in the rapidly-evolving mobile payments space, the company’s reputation is mixed.

Serving millions upon millions of customers isn’t a walk in the park, and when something goes wrong with somebody’s money, the world is bound to hear about it one way or another.

While PayPal is the target of a variety of complaints, some of the most common have to do with frozen funds. That isn’t surprising. When PayPal’s efforts to detect and fight fraud, or cover its behind for chargebacks, result in somebody’s access to their money being restricted, things can get ugly, fast.

PayPal’s David Marcus, learned that quickly when he became president of the company last year when a PayPal customer named Andy McMillan turned to Twitter to vent about £40,000 in funds that he was being kept from in his PayPal account. McMillan’s plight caught the attention of the Twittersphere, and that forced Marcus to reach out personally in an effort to make things right.

“Aggressive changes” are on the way

At the time, Marcus gave McMillan his personal contact information and invited McMillan to help him improve PayPal. Now, it looks like some of the changes Marcus promised are about to be rolled out.

And they couldn’t come soon enough. As detailed by CNN Money’s Julianne Pepitone, Andy McMillan hasn’t been the only visitor to “Paypal hell.” Plenty of others have found themselves in a seemingly helpless situation with no way to access large sums of money and no ability to navigate PayPal’s customer service department to find a resolution.

That, obviously, is problematic, and according to PayPal’s senior director of communications, Anuj Nayar, it’s forcing “a fundamental shift in our business operations” that is coming soon.

Providing more information is key. “We want to be clear about how people can get out of the situation,” Nayar explained. Other details are scant, but Nayar says the changes “are not minor.”

Too little, too late?

The big question is whether PayPal’s changes are coming too late. Although PayPal is still a dominant force in online payments, the company should be concerned with the success of upstarts that are targeting some of its bread-and-butter customers. Those upstarts include companies like Stripe, which has gained traction by building a payments platform geared toward developers.

The good news for PayPal is that its younger competitors will almost certainly face issues as they grow. Payment processing is difficult, and companies must do certain things to fight fraud. The bad news for PayPal is that the upstarts have probably learned from its mistakes, and will focus doubly hard on avoiding them. That means one thing: in the battle to win over the customers it has already lost, PayPal has its work cut out for it.

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on Tuesday, January 22nd, 2013 at 6:49 pm and is filed under Uncategorized.
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